Bitcoin Price Passes $600 as Talks of Recession Intensify

Described as a reversal to the pre-Bitfinex hack price, Bitcoin has bounced back to the $600 range which will continue to rise if the global economic outlook is anything to go by.

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Several reasons have been alluded to regarding the sharp rise in the price of Bitcoin from Saturday September 3 when it jumped from about $574 to $610 by the following day, including a push from speculators expecting the devaluation of the Chinese yuan.

NIRP Umbrella tweeted that Bitcoin’s price was nearly 10% against the yuan, citing the decentralized utility of the currency being “in full force vs. arbitrary devaluations.”

Factors that might have influenced the price

Now sitting at the $600 price range, this is the highest the currency has reached since the August 2 hack of the Chinese exchange Bitfinex, when Bitcoin worth close to $65 million was reportedly stolen. Its price was around $640 before the hack.

The fact that the rise came after Bitfinex announced the redemption of 1.1812% of outstanding BFX tokens also points in the direction of the exchange being a factor for the price swing. Or that it was a reversal to the pre-Bitfinex hack price.

The announcement of the Brave Browser implementing Bitcoin micropayments could also be a contributor. The 0.11.6 release of Brave enables users to reward websites they enjoy frequenting while getting rid of tracking and adware techniques at the same time.

Another reason might be that the Russian authorities have officially stated there will be no penalties for Bitcoin use. Based on movement on Fiatleak around the time of the spike, a Reddit member Midipoet stated:

“That's a pretty interesting website. We should have seen this coming. It was only a few days ago that Russia 'legalised' Bitcoin, and there is a LOT of money in Russia. If you factor in the countries that deal with Russia, and the fact that they would want a monetary exchange system that is quicker/cheaper/safer than FIAT, the price rise is actually a no-brainer.”

On another thread, timfcrn stated that the rise is as a result of people taking huge profits from other cryptos into Bitcoin, which has forced a massive short squeeze that some miners didn't see.

The user says:

“Remember, there aren’t as many Bitcoins earned by miners, so if they're not careful about their commercial hedging (shorting), they could face huge squeezes if people taking profits in other cryptos move to Bitcoin again.”

What comes next?

The interest in Bitcoin may have also increased now for the reason that negative interest rates are spreading with central banks in the Eurozone, Switzerland, Sweden, and Japan all having below-zero policy rates. Yahoo Finance reports that a negative interest rate policy NIRP is the only move that those central banks have.

Though the US Federal Reserve hasn’t followed, there are suggestions that it is already preparing for NIRP. In a congressional testimony last February, Janet Yellen said she had “not fully investigated” the legal issues of a negative rate strategy. Asked again about NIRP in June, Yellen stated that the Fed did not have the legal authority to use negative rates. She denied plans to do it, but said there was no legal barrier.

It shows that between February and June, the Fed’s counsel developed some kind of legal justification for NIRP. Though it doesn’t mean they will do it, but it does suggest that Yellen wants to have a NIRP contingency plan ready to pull out if necessary. The next Fed meeting is between September 20-21.